Speech

For Release in AMfS Sunday, March 22, 1970 ECONOMIC PROGRESS OF NEGROES IN THE UNITED STATES The Deepening Schism Remarks by Andrew F. Brimmer Member Board of Governors of the Federal Reserve System At the Founders1 Day Convocation Tuskegee Institute Tuskegee, Alabama March 22, 1970 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis ECONOMIC PROGRESS OF NEGROES IN THE UNITED STATES The Deepening Schism By Andrew F. Brimmer* To be asked to address this Founder's Day Celebration in honor of the memory of Booker T. Washington is really a way of honor- ing the one receiving the invitation. Not only on this campus, or in this community, but in the country at large anyone with even the most modest sense of history knows that the memory of Booker T. Washington is honored every day by the simple fact that Tuskegee Institute is here. That memory is embossed and embellished each time that this institution can render another day of service to the Negro community, to its region and to the nation through its commitment to higher education. Yet, it is also good to pause at least once each year to reflect explicitly on the founding of this institution in rural Alabama in 1881. Since 1917, Tuskegee has found the time for such reflection, and the roster of speakers testifies to the high regard for Tuskegee in this country and in the world. This annual celebration has drawn to this campus a President of the United States, the Head of a foreign government, a Chief Justice of the Supreme Court, members of the President's Cabinet, other leading representatives of the Federal and State governments -- as well as eminent scholars and educators and * Member, Board of Governors of the Federal Reserve System. I am grateful to Mr. Henry S. Terrell and Miss Harriett Harper of the Board's staff for assistance in the preparation of these remarks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -2- outstandirig figures in the private sector. However, in coming here, they came as much to encourage the work of a growing Tuskegee as to honor the memory of its founder. So I am flattered to be a part of this tradition. Having accepted the invitation to speak before this assembly, I decided that you really did not want me to dwell on the obstacles which Booker T. Washington had to overcome in the creation of a viable institution; nor did you expect me simply to extol the record of Tuskegeefs achievements during the last 89 years. Rather, given the nature of my own responsibilities, I assumed that I was invited because you thought I might have something to say with a bearing on some of the central economic issues which we face today -- especially those issues of immediate relevance to the Negro community. On that assumption, I decided that it might be helpful to focus on a question that has generated a considerable amount of debate in th e last few weeks: did Negroes make such extraordinary progress during the 1950!s that the best course for public policy over the years ahead is one of "benign neglect"? Obviously this is not a trivial question. While the exact meaning of this proposition is far from clear, it has been advanced in a context whose potential impact on public policy in the area of race relations can be considerable. Thus, it is crucial that all of us have a clear understanding of the extent of economic progress which Negroes have made -- and we must also Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -3- have a full appreciation of the extent to which important segments within the Negro community have failed to share in this progress. To help provide such an understanding, I have pulled together a considerable amount of statistical information relating to the economic experiences of Negroes during the last decade. From an examination of this evidence, I am convinced that it would be a serious mistake to conclude that the black community has been so blessed wit h the benefits of economic advancement that public policy -- which played such a vital role in the 1960fs -- need no longer treat poverty and deprivation among such a large segment of society as a matter of national concern. To accept such a view would certainly amount to neglect -- but it would also be far from benign. The evidence underlying my assessment is presented in some detail in the rest of these remarks, but the salient conclusions can be summarized briefly: During the 1960fs, Negroes as a group did make significant economic progress. This can be seen in terms of higher employment and occupational upgrading as well as in lower unemployment and a narrowing of the income gap between Negroes and whites. However, beneath these overall improvements, another -- and disturbing -- trend is also evident: within the Negro community, there appears to be a deepening schism between the able and the less able, between the well- prepared and those with few skills. This deepening schism can be traced in a number of ways, including the substantial rise in the proportion of Negroes employed Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -4- in professional and technical jobs -- while the proportion in low-skilled occupations also edges upward; in the sizable decline in unemployment -- while the share of Negroes among the long-term unemployed rises; in the persistence of inequality in income distribu- tion within the black community -- while a trend toward greater equality is evident among white families; above all in the dramatic dete- rioration in the position of Negro families headed by females. In my judgment, this deepening schism within the black community should interest us as much as the real progress that has been made by Negroes as a group. Before concluding these remarks, I would also like to comment briefly on the new program of family assistance, recommended by the President and now being considered by the Congress. It is my impres- sion that this program is a source of much discussion -- and some apprehension -- within the Negro community. In my personal judgment, there is more reason to support it than to campaign against its enactment. Let us now turn to a closer examination of each of these main points. Employment and Occupational Upgrading The economic progress of Negroes can be traced in the trends of the labor force, employment and occupational advancement during the last decade. In 1969, there were just under 9 million nonwhites in the labor force -- meaning that they were holding jobs or seeking work. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -5- (Well over 90 per cent of nonwhites are Negroes.) This was a rise of 16 per cent since 1960, a rate of increase virtually the same as for whites and for the total labor force. However, employment of non- whites rose more rapidly than it did for whites (by 21 per cent to 8.4 million for the former compared with 18 per cent to 69.5 million for the latter). Expressed differently, while nonwhites represented about 11 per cent of the total labor force in both 1960 and 1969, their share of the gains in employment during the decade was somewhat larger: they accounted for 12 per cent of the employment growth, although they held jus t over 10 per cent of the jobs at the beginning of the period. Advancement in the range of jobs held by Negroes in the last decade was also noticeable. This was particularly true of the improve- ments in the highest paying occupations. Between 1960 and 1969, the number of nonwhites in professional and technical positions increased by 109 per cent (to 692 thousand) while the increase for whites was only 41 per cent (to 10,031 thousand). By last year, nonwhites had progressed to the point where they accounted for 6-1/2 per cent of the total employment in these top categories in the occupational structure (compared with less than 4-1/2 per cent in 1960), and they got about 11 per cent of the net increase in such jobs over the decade. During this same period, the number of nonwhite managers, officials and proprietors (the second highest paying category) increased by 43 per cent (to 254 thousand) compared to an expansion of only 12 per cent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -6- (to 7,721 thousand) for whites. In the 1960fs, nonwhite workers left low-paying jobs in agriculture and household service at a rate two to three times faster than did white workers. The number of nonwhite farmers and farm workers dropped by 56 per cent (to 366 thousand) in contrast to a decline of 31 per cent (to just under 3 million) for whites in the same category. In fact, by 1969, nonwhites accounted for the same proportion (11 per cent) of employment in agriculture as their share in the total labor force; in 1960, the proportion for non- whites (at 16-1/2 per cent) was more than 1-1/2 times their share in the total labor force. The exit of nonwhites from private household employment was even more striking. During the last decade, the number of nonwhites so employed fell by 28 per cent (to 712 thousand); the corresponding drop for white workers was only 9 per cent (to 900 thousand). Although roughly half of all household workers were non- white in 1960, the ratio had declined to just over two-fifths by 1969. The number of nonfarm laborers also fell (by 8 per cent to 876 thousand) over the last decade while the number of white laborers rose by the same percentage (to 2,809 thousand). Nevertheless, as already indicated, the accelerated movement of nonwhites out of the positions at the bottom of the occupational pyramid did not carry through the entire occupational structure. For example, nonwhites in 1969 s t i ll held about 1.5 million of the service jobs outside private households -- most of which require only modest skills. This represented one-fifth of the total -- approximately the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -7- same proportion as in 1960. Moreover, the number of nonwhites hold- ing semi-skilled operative jobs (mainly in factories) rose by 41 per cent (to about 2 million) during the decade, compared with an expan- sion of only 17 per cent (to 12.4 million) for whites. The result was that nonwhites1 share of the total climbed from 12 per cent to 14 per cent. Taken together, these two categories of low-skilled jobs chiefly in factories or in nonhousehold services accounted for a larger share (42 per cent) of total nonwhite employment in 1969 than they did in 1960 -- when their share was 38 per cent. In contrast, among whites the proportion was virtually unchanged -- 26 per cent at the beginning of the decade and 27 per cent at its close. While nonwhites made substantial progress during the 1960fs in obtaining clerical and sales jobs -- and also registered noticeable gains as craftsmen -- their occupational center of gravity remained anchored in those positions requiring little skill and offering few opportunities fo r further advancement. At the same time, it is also clear from the above analysis that those nonwhites who are well-prepared to compete for the higher-paying positions in the upper reaches of the occupation structure have made measurable gains. These contrasting experiences should be borne in mind because they point clearly to the deepening schism within the black community. Trends in Unemployment Over the 1960ls, unemployment among Negroes declined sub- stantially. In 1960, about 787 thousand nonwhites were unemployed, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -8- representing 10.2 per cent of the nonwhite labor force. Among whites in the same year, about 3.1 million were without jobs, and the unemployment rate was 4.9 per cent. By 1969, unemployment had dropped by 28 per cent (to 570 thousand) for nonwhites and by 26 per cent (to 2.3 million) for whites. Their unemployment rates had fallen to 6.4 per cent and 3.1 per cent, respectively. The incidence of joblessness among nonwhites continued to be about twice that for whites during the 1960fs. Even in those categories where the most favorable experience was registered, nonwhite unemploy- ment rates remained significantly higher than those for whites. For instance, among married nonwhite males aged 20 years and over, the unemployment rate in 1969 stood at 2.5 per cent, compared with 1.4 per cent for white men in the same circumstances. Nevertheless, one should not lose sight of the fact that -- taken as a group -- Negroes made real strides in escaping idleness in the 1960's. But, here again, we should not stop with this over-view. On closer examination, one quickly observes that a sizable proportion of the remaining unemployment among Negroes appears to be of the long- term variety. For example, in 1969, j ust under 20 per cent of the unemployed nonwhites on the average had been without jobs for 15 weeks or longer; among whites the proportion was only 12-1/2 per cent. More- over, those out of work for more than half a year represented 7 per cent of the joblessness among nonwhites compared with 4 per cent for whites. In 1961, when unemployment rose substantially under the impact of the 1960-61 recession nonwhites accounted for about 21 per Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -9- cent of total unemployment and for roughly 24 per cent of those with- out jobs for at least 3-1/2 consecutive months. However, by 1969, nonwhites made up 27 per cent of the pool of long-term joblessness -- although thei r share of total unemployment had declined slightly to 18 per cent. So, while a significant number of Negroes did find -- and keep -- jobs during the last decade, a sizable number of others were stuck in idleness for fairly long periods of time. Still other evidence can be cited which underlines the contrasts within the Negro community. During the first eleven months of 1969, the unemployment rate among nonwhites living in the central cities of the 20 largest metropolitan areas averaged 6.3 per cent; it was a full percentage point less among those living in the suburban sections of these areas. Among nonwhite teenagers (those members of the labor force 16 to 19 years old), the unemployment rate averaged 27 per cent. During the same period of 1969, there was very l i t t le difference in unemployment rates between whites living in central cities (3.1 per cent) and those living in suburbs (2.9 per cent), and for white teenagers, the rate was 10 per cent. So, judged by the differential impact of unemployment -- as well as by the trend of employment and occupational upgrading — some Negroes have experienced commendable improvement while others have lingered behind in relative stagnation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -10- Trends in Income: A Reexamination Undoubtedly, income statistics are probably the most closely watched indicators of economic progress. This is true for Negroes as well as for whites. These figures also demonstrate that the Negro community recorded significant gains during the last decade. In 1961, aggregate money income of families in the United States totaled $306.6 billion, of which whites received $290.4 billion and nonwhites received $16.2 billion. Thus, the nonwhites1 share was 5.3 per cent. By 1968, the tota l had risen to $488.4 billion -- with $454.5 billion going to whites and $33.9 billion going to nonwhites. In that year, the non- whites1 share had risen to 6.9 per cent. In terms of median family income, the same indication of progress is evident. In 1959, the median income of nonwhite families amounted to $3,164, or 54 per cent of that for whites -- which amounted to $5,893. By 1968, the figure had risen to $8,936 for whites and to $5,590 for nonwhites, thus raising the nonwhite/white ratio to 63 per cent. These relative family income data are a useful concept for some purposes, but they must be interpreted carefully. Otherwise they yield a misleading picture of the comparative economic status of the nonwhite population. A principal source of error is the failure of data on median family income to account for the fact that nonwhite families on average tend to be substantially larger than white families. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -11- Data on median family income adjusted to a per capita basis to account for much larger minority families are presented in Table 1. (Attached.) When further adjustments are made to differentiate among types of families, several important conclusions result. The first and most important of these is that, for all types of families, non- white per capita family income is substantially lower in relation to that for white families than was suggested by the unadjusted figures. It appears that in 1967 the median income data unadjusted for differences in family size may have overstated the relative economic status of non- white families by something on the order of 11 per cent. The information in Table 1 permits a further analysis of growth trends in per capita family income compared to growth trends in relative median family incomes for different types of households. For all families and for husband and wife families, the relative gains on a per capita basis were only slightly less than the relative gains on a total family income basis. The picture for female headed families, however, is completely different. The latter have the lowest median family income in general, and nonwhite families headed by females have the lowest median income compared to their white counterparts. What is perhaps even more disturbing, however, is that--because of the much larger size of nonwhite female headed households.!/ -- the per capita differences 1/ In 1967, the average Negro husband-wife family was .76 members larger than its white counterpart, but the average Negro female headed family was 1.26 members larger. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -12- in family income are substantially wider than the differences in median family income. In 1967, the ratio of family income per capita of female headed nonwhite families (at 44 per cent) was 18 percentage points lower than the ratio of Negro to white median family income. The data in Table 1 appear to indicate that the gap between white and Negro per capita family income has not been narrowing as rapidly as suggested by the most widely cited income figures. The conclusion reached by expressing median family income in per capita terms is that the usually observed ratios convey an unrealistic picture of family well-being because they fail to account for the larger absolute size of nonwhite families. Another indication of the widening gap within the Negro community is provided by the distribution of income among families and individuals at different levels of income. Data showing these trends, by race and broad groupings of income classes, are presented in Table 2. In examining these data, the first thing to note is that the distribution of income is by no means equal in either the white or non- white community. If it were, each fifth of the families would receive 20 per cent of the aggregate income in each year. In reality, however, only those families around and just above the middle of the distribution come close to receiving approximately this proportion of the total income. The families constituting the lowest fifth receive between 3-1/2 per cent and 6 per cent of the income, while those in the highest fifth Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -13- receive over 40 per cent of the total. This general pattern of income distribution holds for both white and nonwhite families. But looking beyond these overall characteristics, it will also be observed that, within the nonwhite community, the distribution of income is considerably more unequal. Among nonwhites, from the lowest through the middle fifth, for each of the years shown, the proportion of aggregate money income received by the families in each category is below that for the white community. The opposite is true for nonwhite families above the middle fifth; their share is greater than that received by white families in the same category. The same tendency is evident when the top 5 per cent of the families with the highest incomes in both groups are compared. Moreover, i n the last few years, the distribution of incomes within the nonwhite community has apparently run counter to the trend among white families. In both the 1961-65 period and the 1965-68 period, the income distribution for white families became more equal. For nonwhite families, the same trend toward greater equality was evident in the first half of the decade. However, it remained roughly constant in the 1965-68 years. And the share received by the top 5 per cent particularly showed no further tendency to decline. Again, these figures seem to underline a conviction held by an increasing number of observers: a basic schism has developed in the black community, and it may be widening year-by-year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -14- Poverty in the Negro Community Poverty is a difficult concept to define in any meaningful sense. Yet, quantitative estimates are necessary if policymakers are to have reliable information on which to make decisions. Since 1965, the United States Government has relied on the estimates developed by the Social Security Administration which, for whatever their defects, appear to be the most reliable data available. The poverty concept developed by the Social Security Administration classifies a family as poor if its income is not roughly three times as great as the cost of an economy food plan for a family of that particular size and farm or nonfarm residence. In 1968, a nonfarm family of four was assumed to be living in poverty if its total money income was less than $3,553. The income deficit of a family is that amount required to raise its income to the poverty threshold. Table 3 reviews the 1959-68 record of the escape of individ- uals from poverty. These data demonstrate quite clearly that the rate of decline of poverty for whites has been substantially faster than the rate of decline for nonwhites. Between 1959 and 1968, poverty among whites declined by 39 per cent while poverty among nonwhites declined by 27 per cent. Thus, in 1968 nonwhites made up a greater proportion of the total poor population than they did in 1959 -- the fraction increasing from 27.9 per cent to 31.5 per cent. This much more rapid rate of exodus by whites from poverty is explained by the fact that in 1959 the average poor white family was not nearly as Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -15- deeply in poverty as the average poor nonwhite family. In 1959, the median income deficit for white families was only $868 while for non- whites it was $1,280, or 47.5 per cent higher. Clearly, it took less economic achievement to l i ft the average white family out of poverty. It should be further noted that in 1968 the median income deficit for poor nonwhite families was $1,260 while for white families it was only $907, a difference of 38.9 per cent. Thus, these figures suggest that the future will continue to witness a more rapid rate of escape from poverty by whites than by nonwhites. The data in Table 3 are of further interest because they permit an analysis of changes in poverty status by type of family. Disaggregating the poverty data into male and female headed families highlights several important points. Between 1959 and 1968, the rate of decline in poverty among individuals in malja headed families of whites and nonwhites was roughly equal and also rather rapid. In 1968, the number of individuals classified as poor in male headed households for both races was roughly half the number in 1959. Distressingly, however, for female headed families, the pattern was quite different. For the white population, the rate of decline among poor individuals in female headed families was substan- tially below the rate for individuals in male headed families. By 1968, there were only 16 per cent fewer poor individuals in white female headed households compared with 1959. For nonwhites, the data Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -16- on changes in poverty among individuals in female headed families are extremely disturbing. Between 1959 and 1968, the number of non- whites in poor female headed families increased by 24 per cent, and the number of nonwhite family members under 18 rose by an alarming 35 per cent. Between 1959 and 1968, there was an absolute increase of 609 thousand nonwhite family members 18 or less classified as poor living in a female headed family. So while the 22 million Negroes constituted only 11 per cent of the country's total population in 1968, the 2.3 million poor children in nonwhite families headed by females represented 52 per cent of all such children. The data on the rate of escape from poverty for different types of families also emphasize the development of a serious schism within the Negro community. Negroes in stable male headed families appear able to take advantage of economic growth and are leaving poverty at roughly the same rates as whites. The opposite appears true fo r families headed by a female, who appear unable to earn a sufficient income to escape poverty. The rapid increase in the number of poor nonwhites in female headed families -- and particularly the very rapid rise of children 18 and under in their families -- suggests that the problem of poverty in the black community has by no means disappeared. Having discussed recent changes in the overall poverty population, it is important to examine briefly the rural experience. For farm families the record is much more encouraging with a decline Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -17- of almost three-fourths in the number of poor individuals in nine years. Moreover, the rate of decline was roughly equal for whites and nonwhites. These results may in part reflect a growing prosperity in agriculture, but in large part they are due to a migration of the poor of both races from rural to urban settings. The conclusions from this section are that nonwhite poverty in general has not declined as rapidly as white poverty, primarily because nonwhites classified as poor tended to be substantially poorer than whites classified as poor. This section has also shown that in the last decade there has been an alarming rise in the number of poor nonwhite children under 18 living in female headed families. Prosperity in the Negro Community: The Importance of Education The above discussion has obviously reflected a rather pessimistic assessment of several aspects of economic developments in the Negro community -- focusing as it did on nonwhite poverty and the fact that actual white-nonwhite income discrepancies are wider than commonly observed statistics would suggest. To stop here, however, would present a somewhat unbalanced view of Negro economic progress. To present a more balanced picture, it is important to consider the source of some of the recent gains within the Negro community. In particular, it is important to discuss the role of education. Recent data suggest that Negroes are making considerable gains in both secondary and higher education. Between 1960 and 1969, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -18- the per cent of Negro males aged 25 to 29 who had completed 4 years of high school or more increased from 36 per cent to 60 per cent while the white fraction increased from 63 per cent to 78 per cent. Thus, in 1960 the gap had been 27 percentage points,and in nine years this gap had narrowed to only 18 percentage points. In 1968, for the first time a greater percentage of Negro males aged 25-29 completed high school than Negro females. In the case of higher education, the gains also have been impressive. Table 4 presents data on trends in Negro college enroll- ment between 1964 and 1968. In these four years, the number of Negroes in college rose by 85 per cent. What is more striking, however, is the fact that during this period, 82 per cent of this enrollment growth occurred in institutions other than the predominantly Negro colleges. Thus, in only four years, the per cent of Negro college students enrolled outside predominantly Negro colleges increased from 49 per cent to 64 per cent. This fact suggests that the larger institutions are becoming increasingly aware of minority problems and are making a concerted effort to assist minority group students. In four years the number of Negro students at these institutions has more than doubled. The importance of higher education in the economic achieve- ments of whites and Negroes is underlined by the data in Table 5. It is clear that median incomes for men of both races increase dramatically with increasing amounts of education. What is even more important, the ratio of Negroes1 income to that of whites rises as the level of education Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -19- climbs. Stated in a slightly different fashion, the relative gaps within the Negro community between those with higher education and those with lower education are wider than for whites. In 1968 a Negro man, aged 25-54, with a high school education had an income 29 per cent above that for a Negro man with only an 8th grade education, while for whites this gap was 26 per cent. The case of a Negro with some higher education is of partic- ular interest. This is a man with the highest absolute income and the highest income relative to whites. Unfortunately, due to the unavail- ability o f more data, the figures in Table 5 probably seriously under- state the contribution of higher education to Negro income. The last line in Table 5 shows the income of whites and Negroes with 1 or more years of college. This category is really a composite of the categories 1 to 3 years of college and 4 or more years of college. Of all Negro men 25 years of age or over in 1967 reporting one or more years of college, 60 per cent were concentrated in the 1-3 year category. For all white men reporting more than 1 year of college, there was a much greater tendency to have four or more years of college, with only 42 per cent concentrated in the 1-3 year class. If a more complete breakdown of the data in Table 5 were available, they would probably indicate a higher return to Negro higher education. A second reason why the data in Table 5 may understate the returns to higher education for Negroes is that they fail to account Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -20- for the age distribution of those achieving higher education. Since major education gains among Negroes have been a rather recent occurrence the bette r educated Negro man will be substantially younger than his white counterpart. Table 6 documents this point by comparing educational achievements of whites and Negroes at similar age levels. These data show conclusively that the differences in educational achievements are in large part a function of age with the widest gaps among the older segments of the population. It is clear that the best educated within the Negro community are much more highly concentrated in the younger age brackets. Since income increases directly with age, when education is held constant,!/ due to factors of experience and promotions based on length of service, the failure of the data in Table 5 to account for the relatively younger age distribution of the better educated Negro population seriously underestimates the returns to education for Negro males. The figure for white males with higher education refers to an older population and thus, in part, reflects returns to age and experience as well as returns to education. Unfortunately, we will have to wait until the processing of the 1970 Census has been completed to get more complete data. The conclusions from this discussion of education then are much more encouraging than the results reached above. Younger Negroes 1/ In 1967, the median income of all males aged 25-34, with four years of college, was $8,716, for those with the same education, aged 45-54, it was $12,267, or 40.7 per cent higher. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -21- are making substantial progress in achieving secondary and higher education, and this increased education is associated with higher absolute income and income relative to whites. Negroes and the Family Assistance Program As I indicated above, I would like to comment briefly on the proposal to change significantly the principal means through vhich the Federal Government provides assistance to needy families* In recent years, these programs have become an important source of income for memy Negro families headed by females in which a sizable number of children are found. Thus, one can readily understand why the President's recom- mendation to change them submitted to Congress in August, 1969, haft generated so much discussion (and some apprehension) in the Negro community. It will be recalled that, in broad outline, the proposed family assistance program would have the Federal Government pay a basic income to all families who could not provide for themselves — whether they are employed or unemployed. It would be geared to dependent families with children. It would replace entirely the largest of the Federally supported public assistance programs (i.e., aid to families with dependent children). Under the proposal, persons (except mothers with preschool children) who accept assistance would be required to register for work or training. It is estimated that in the first year of the program, over half of the families covered would have one member employed or undergoing training. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -22- As recommended to Congress, the family assistance program would work in the following fashion: A family's basic allowance would consist of $500 for the first two members and $300 per member for each additional member. Thus, for a family of four, the allowance would be $1,600 per year. Cash payments to families would be computed by adjusting the basic allowance to account for the earnings of the family. The first $720 of family income would not affect the payments because it is assumed that there are basic costs of transportation, lunches, clothing, etc., associated with taking a job. Cash payments to families would then be reduced by 50 cents for each additional dollar of earnings above the $720 minimum. A simple numerical example will illustrate the program's operation. Assume a family of four has a cash income of $2,000. The first $720 of this income would be disregarded, leaving a balance of $1,280. A family's cash payment would then be reduced by half this amount, or by $640. Since the family's basic allowance was $1,600, its cash payment after earnings would be $960. So far only a rough idea can be provided with respect to the probable coverage of the family assistance program. The projections available are shown in Table 7, as prepared by the Department of Health, Education and Welfare in February of this year. According to these estimates, in 1971, about 3.3 million families would be covered; of these 2 million (three-fifths) would be white, and 1.3 million Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -23- (two-fifths) would be nonwhites. These families would include close to 18 million persons -- of whom 44 per cent would be nonwhites. Gross payments would approximate $3.5 billion, and nonwhites would receive about $1.5 billion -- or 43 per cent. These annual payments would average around $1,060 for all families, about $1,000 for white families, and about $1,154 for nonwhites. However, since nonwhite families are expected to be somewhat larger (averaging 6.0 members vs. 5.1 members for whites and 5.4 members for all families), payments per capita would be about the same: $196 for all families, $198 for whites, and $192 for nonwhites. It is difficult to compare the differential impact of the proposed program on particular groups of families compared with the existing program. However, it appears that a somewhat greater propor- tion of the families covered by the new program would be white compared with those covered by aid to families with dependent children (AFDC). In 1968, there were 1.5 million families participating in AFDC, involv- ing 6.1 million persons, of whom 4.6 million were children. Outlays under the Federally aided programs amounted to $3.4 billion, and the average monthly payment per family was $168 (just over $2,000 per year). In 1967, according to an HEW survey conducted in 1968, about 51.3 per cent of the families covered by AFDC were white, 46 per cent were Negro, and 2.7 per cent were other nonwhites. In 1961, whites constituted 51. 8 per cent of the total, Negroes 43.1 per cent, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -24- other nonwhites made up the remaining 5 per cent. So during the decade of the 1960?s, Negroes as a proportion of total AFDC coverage increased while the proportion for all other groups was declining. On balance, it appears that the new family assistance program would represent a considerable improvement -- compared with the existing AFDC program -- in about 20 States. Of these, 14 are Southern States (with a heavy concentration of Negroes), and most of the remainder are Western States (with a sizable proportion of Indians and Mexican- Americans among their populations). In 1968, the average annual payment under AFDC in the 14 Southern States was approximately $1,116. However, the average payment varies greatly among these States, and in some it is much below $1,000. Thus, given an annual payment of $1,600 for a family of four, there would be an increase of roughly $480 (or well over 40 per cent) compared with the amounts received by the average AFDC family in this region. While the exact status of families under the old and new programs cannot be determined, there appears to be no doubt whatsoever that the new proposal would result in a real improvement. In 30 States there would also be an opportunity to make further improvements. However, in these cases, the outcome would depend on whether the States and local governments maintained their existing programs at substantially the same level. If these outlays were held at no less than 90 per cent of the 1968 level, assisted families would be better off in virtually every instance. Under the existing AFDC Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -25- program, the average annual payment in these States in 1968 was $2,195 (of which $1,044 represented non-Federal payments). Under the new program (and assuming the 90 per cent maintenance factor), the average payment per family would rise to about $2,536. Thus, the new arrangement would imply an increase of roughly $340, or 15 per cent. The 30 States include primarily the heavily populated northern industrial States plus California. Most of these have a sizable concentration of low-income nonwhites in urban areas. So, while these estimates of the probable improvement which might accrue under the new program of family assistance are obviously crude, they are suggestive. They imply that Negroes -- and particularly the poverty-stricken families headed by females -- would benefit sub- stantially. And above all, it would create a promising basis for checking the increased dependence on public welfare of a growing segment of the population. Concluding Observations The analysis presented here has sketched a rather mixed picture of economic progress among Negroes in the United States. While not meaning to deny or demean the recent impressive economic gains by Negroes, we must be careful that no one is lulled into believing (falsely) that the economic problems of Negroes have been solved. In this regard, the commonly observed income statistics, when accepted at face value, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -26- convey an unwarranted sense of greater economic parity between whites and Negroes than actually exists. It was also noted that a closer analysis of the available data shows clearly that a definite economic schism has arisen within the Negro community. Individuals in male headed households appear able to share fairly well in economic advances, while those in female headed households are sinking backwards into poverty. Those individuals who have prepared themselves for challenging careers by seeking and obtaining higher education are registering relatively large improvements in incomes , while those without such training are falling further behind. Clearly, the economic condition of those who currently are lagging should be made a matter of serious national concern. For this reason, the proposed family assistance program is pointing in the right direction, and -- despite reservations many might have about some of its components -- it should be viewed with greater receptivity within the Negro community. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Table 1 Family Income Adjusted to Per Capita Basis, by Type of Family, by Race of Head, 1959 and 1967 All Families Husband-wife Families Female-Headed Families 1959 1967 1959 1967 1/ 1959 1967 y Median Family Income White 5893 8274 6089 8269 3538 4879 Nonwhite 3164 5141 3663 5854 1734 3015 Ratio .54 .62 .60 .71 .49 .62 Persons Per Family White 3.58 3.59 3.66 3.66 2.93 3.03 Nonwhite 4.31 4.35 4.42 4.42 4.04 4.29 Per Capita Family Income White 1646 2305 1664 2358 1208 1610 Nonwhite 733 1182 829 1324 429 703 Ratio .45 .51 .50 .56 .36 .44 1/ Data for 1967 refer exclusively to Negroes. Source: U.S. Department of Commerce, Bureau of the Census, Income in 1967 of Families in the United States, Series P-60, No. 59, April 18, 1969, and, IKS. Census of Population: 1960, Vol. 1, Characteristics of the Population. Part 1, United States Summary, 1964 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Table 2. Trends in the Income of Families in the United States: 1950 to 1968 INCOME RANK 1968 1967 1965 1961 1950 FAMILIES TOTAL - ALL RACES PER CENT 100.0 100.0 100.0 100.0 100.0 LOWEST FIFTH 5.7 5.4 5.3 4.8 4.5 SECOND FIFTH 12.4 12.2 17.1 11.7 12.0 MIDDLE FIFTH 17.7 17.5 17.7 17.4 17.4 FOURTH FIFTH 23.7 23.7 23.7 23.6 23.5 HIGHEST FIFTH 40.6 41.2 41.3 42.6 42.6 TOP 5 PER CENT 14.0 15.3 15.8 17.1 17.0 WHITE PER CENT 100.0 100.0 100.0 100.0 100.0 LOWEST FIFTH 6.0 5.8 5.6 5.2 4.8 SECOND FIFTH 12.7 12.5 12.5 12.1 12.2 MIDDLE FIFTH 17.7 17.5 17.7 17.3 17.3 FOURTH FIFTH 23.4 23.5 23.4 23.2 23.1 HIGHEST FIFTH 40.3 40.7 40.8 42.2 42.5 TOP 5 PER CENT 14.0 14.9 15.5 17.3 17.6- NEGRO AND OTHER RACES PER CENT 100.0 100.0 100.0 100.0 100.0 LOWEST FIFTH 4.8 4.4 4.6 4.0 3.5 SECOND FIFTH 10.5 10.4 10.7 9.7 10.2 MIDDLE FIFTH 16.5 16.4 16.5 15.9 17.6 FOURTH FIFTH 24.6 24.1 24.7 24.3 25.2 HIGHEST FIFTH 43.6 44.7 43.5 46.0 43.5 TOP 5 PER CENT 16.1 17.5 15.5 17.4 16.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Table 3 Persons Below Poverty Level in 1959 and 1968, by Family Status and Sex and Race of Head (Numbers in Thousands) Percentage 1959 1968 Change White, Total 28,484 17,395 -38.9 In Families with Male Head, Total 20,211 9,995 -50.5 Head 4,952 2,595 -47.6 Family Members under 18 8,966 4,298 -52.1 Other Family Members 6,293 3,102 -50.7 In Families with Female Head, Total 4,232 3,551 -16.1 Head 1,233 1,021 -17.2 Family Members under 18 2,420 2,075 -14.3 Other Family Members 579 455 -21.4 Unrelated Individuals 4,041 3,849 - 4.8 Negro and Other Races, Total 11,006 7,994 -27.4 In Families with Male Head, Total 7,337 3,710 -49.4 Head 1,452 697 -52.0 Family Members under 18 4,097 2,032 -50.4 Other Family Members 1,788 981 -45.1 In Families with Female Head, Total 2,782 3,439 +23.6 Head 683 734 + 7.5 Family Members under 18 1,725 2,334 +35.3 Other Family Members 374 371 - 0.8 Unrelated Individuals 887 845 - 4.7 Source: U„S. Department of Commerce, Bureau of the Census, Poverty in the United States 1959 to 1968, Series P-60, No. 68, December 31, 1969~ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Table 4 Negro College Students Enrolled in 1964 and 1968, by Type of Institution (Numbers in thousands) 1964 1968 Change, 1964- 68 (Fall) (Fall) Number Percent Total Enrollment 4,643 6,801 2,158 46 Total Negro Enrollment 234 434 200 85 Percent total enrollment 5 6 (X) (X) Enrollment in predominantly Negro colleges 120 156 36 30 Percent of all Negroes in college 51 36 (X) (X) Enrollment in other colleges 114 278 164 144 Percent of all Negroes in college 49 64 (X) (X) (X) Not applicable. Source: U.S. Department of Labor, Bureau of Labor Statistics; U. S. Department of Commerce, Bureau of the Census; U. S. Department of Health, Education and Welfare, Office of Education Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Table 5 Median Income of Men 25 to 54 Years Old, by Educational Attainment , 1968 Median income, 1968 Negro income as a percent Negro White of white Elementary: Total $3,900 $5,844 67 Less than 8 years 3,558 5,131 69 8 years 4,499 6,452 70 High School: Total 5,580 7,852 71 1 to 3 years 5,255 7,229 73 4 years 5,801 8,154 71 College: 1 or more years 7,481 10,149 74 Source: U.S. Department of Commerce, Bureau of the Census Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Table 6 Median Years of School Completed for Persons 20 years of Age and Over, by Age, 1969 White Negro Difference 20 - 21 years old 12.8 12.2 .6 22 - 24 years old 12.7 12.2 .5 25 - 29 years old 12.6 12.1 .5 30 - 34 years old 12.5 12.0 .5 3 5 - 44 years old 12.4 10.6 1.8 45 - 54 years old 12.2 9.1 3.1 5 5 - 64 years old 10.9 7.6 3.3 65 - 74 years old 8.9 6.1 2.8 75 years old and over 8.5 5.2 3.3 Source: U.S. Department of Commerce, Bureau of the Census Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Table 7 Racial Distribution of Recipients Under the Proposed Family Assistance Program: 1971 Projection (Numbers in millions; amounts in billions of dollars) Families Covered Persons Covered Gross Payments Race Number Per Cent Number Per Cent Amount Per Cent White 2.0 60.6 10.1 56.4 2.0 57.1 Nonwhite 1.3 39.4 7.8 43.6 1.5 42.9 Total 3.3 100.0 17.9 100.0 3.5 100.0 Source: Department of Health Education and Welfare, "Selected Characteristics of Famil ies Eligible for Family Assistance Plan: 1971 Projection,11 February 2, 1970. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Andrew F. Brimmer (1970, March 21). Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/speech_19700322_brimmer

@misc{wtfs_speech_19700322_brimmer,
  author = {Andrew F. Brimmer},
  title = {Speech},
  year = {1970},
  month = {Mar},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/speech_19700322_brimmer},
  note = {Retrieved via When the Fed Speaks corpus}
}